The new Apprenticeship Levy comes into force in April, and we’ll bet it won’t just be Lord Sugar looking to hire a new apprentice this year. However, in a recent survey conducted by Skills for Health and Justice and the National Skills Academy for Health 31% of employers were completely unaware that the levy was being introduced. Although only larger employers will have to pay the levy, employers of any size will be able to benefit from the scheme and receive funding towards apprenticeships and training.
So what do employers need to know about the levy? Only employers with an annual wage bill of over £3 million will have to pay the levy, which means that only 2% of employers will be affected. The amount payable will be 0.5% of a company’s wage bill subject to an allowance of £15,000, so an employer with a wage bill of £5 million would only pay £10,000 annually into the levy. The levy will be payable through the PAYE process in the same way as tax and NI contributions. Despite the fact that only a small number of employers will have to pay the levy, all employers of any size will be able to benefit from the scheme.
How employers will access funding for apprenticeships will depend on where they are based. In England a new scheme has been devised where employers who pay the levy will be able to reclaim the money paid through a digital voucher. This voucher can then be used to purchase apprentice training from a Government approved provider. Those paying the levy will receive an 10% top up on everything they spend from the Government. Those who don’t pay the levy will receive up to 90% of the training costs from the Government as long as they agree to meet the additional 10%.
In Scotland the levy will be distributed through the creation of 30,000 Modern Apprenticeships per year by 2020, and the establishment of a Workforce Development Fund to help employers up-skill and re-skill their workforce. The system in Scotland will continue to be administered in the usual manner through involvement of Skills Development Scotland. In Wales and Northern Ireland the levy will also be distributed through the traditional channels associated with apprenticeships. If you need further guidance on how the Apprenticeship Levy will affect your business, contact your Employment Solicitor or HR Consultant for advice.